Secret files reveal how pay-to-play works in N.J.

TRENTON — The engineering firm Birdsall Services Group was built of New Jersey steel, the kind forged in a fire of wheeling and dealing and political influence that made the company a titan in the brawl for millions of dollars worth of public contracts.

Now it’s all melting down.

Birdsall, bankrupt and a shadow of its former self, admitted in state court this month to dumping loads of illegal campaign donations into the coffers of elected officials, a practice one former employee said "regularly won contracts" for the company.

It was classic Jersey: Banned by law from giving more than $300 to many politicians, Birdsall instead had its employees write personal checks to candidates and then later reimbursed the staffers with salary bonuses and lied to the state on disclosure forms.

The company had created the perfect political machine, one that could skirt laws and churn out checks like a printing press, all without raising a single suspicion because each donation was for such a small sum of money it did not have to be reported to the public.

The scheme went undetected for at least six years until one of Birdsall’s employees was surreptitiously caught on tape discussing it, touching off an investigation that authorities say uncovered one of the most expansive and sophisticated criminal pay-to-play conspiracies in recent history.

But one major piece of the puzzle — who received Birdsall’s money — has remained a mystery.

Until now.

A trove of company records obtained by The Star-Ledger exposes for the first time the hundreds of politicians — from mayors and council candidates to county freeholders and some of the most well-known New Jersey power brokers — whose campaigns profited from Birdsall's crimes. (See complete list of donations below)

The internal records, as well as court documents and interviews with people familiar with the company, offer a stunning behind-the-scenes look at how Birdsall used money to grease palms and jockey past competitors in the high-stakes race for public contracts.

From 2008 to early 2012, Birdsall made more than 1,000 secret contributions worth $1.05 million to candidates and political groups of all stripes and in all corners of the state, according to a Star-Ledger analysis of the records.

During the same period, business disclosure reports show, Birdsall cashed in on more than $84 million in public contracts.

"This is exactly how pay-to-play works," said Craig Holman, who helped draft New Jersey’s pay-to-play law and who now lobbies in Washington for Public Citizen, an advocacy group. "The one side that isn’t so far being penalized are the public officials who received these contributions. If they knowingly and willfully accepted them, they must be prosecuted."

But Holman and other experts said criminal cases will be difficult to prove without hard evidence of a quid pro quo. No politician who received Birdsall’s secret money has been accused of any crime related to the donations. More than a dozen recipients interviewed by The Star-Ledger said they followed the law, gave Birdsall no special treatment in awarding contracts and knew nothing about the firm’s reimbursements to its employees.

"Do I know Birdsall donated money to our campaign? Yeah, they were the engineer in town," said Brick Mayor Stephen Acropolis, a Republican, who records show received $6,000 in secret contributions. "But how do we, at the local level, know employees were told to give those checks, or were told they were going to get that money back and be reimbursed?"

Other recipients of the secret contributions listed in the records included Essex County Executive Joseph DiVincenzo, a Democratic boss in northern New Jersey, groups tied to South Jersey Democratic power broker George Norcross and Ocean County GOP Chairman George Gilmore, Senate President Stephen Sweeney, Newark Mayor Cory Booker, and all of the current Ocean and Monmouth county freeholders.

Records show $900 in personal-check contributions went to the inaugural committee for Republican Gov. Chris Christie and $1,500 to the campaign of his Democratic predecessor, former Gov. Jon Corzine, but both governors publicly disclosed them to the state Election Law Enforcement Commission.

WINNERS AND LOSERS

The company backed candidates who rose to power and some who lost. The gift list also includes at least three politicians hauled off to prison — former Mayors John Bencivengo of Hamilton, Peter Cammarano III of Hoboken and Dennis Elwell of Secaucus.

Approximately $549,487 of Birdsall’s secret contributions went to Republicans and $445,650 to Democrats, with another $58,400 to independents, nonpartisan candidates or unaffiliated political groups or nonprofit organizations, the analysis found.

The top places where Birdsall targeted its money were also some of the company’s most lucrative clients.

Records show $110,000 went to politicians and political groups in Barnegat, $96,025 in Ocean County, $87,020 in Brick, $66,035 in Monmouth County and $35,500 in Lakewood. The company earned approximately $2.45 million from Barnegat during the same period for engineering work according to disclosure reports, $1.45 million from Ocean County, $4.9 million from Brick, $4.2 million from Monmouth County and $1.2 million from Lakewood.

"I’ve talked to a lot of people who operate on the basis of the fiction that unless you sit down across the table and say, ‘I’ll give you X dollars if you give me that contract,’ that anything short of that is perfectly okay," said Edwin Stier, the prestigious New Jersey lawyer appointed to oversee Birdsall during bankruptcy. "And the point is that if you’re paying money to influence decisions by government officials that steer business your way, it’s wrong and it needs to be addressed."

The politicians who received Birdsall’s secret money said they were never influenced and that all contracts were awarded on merit.

"To the extent any contributions were received from Birdsall, whether the company or individuals, they had no effect on any contracts awarded by Ocean County," Gilmore said. The Ocean County Republican Chairman’s PAC received $18,450 in secret donations, records show.

"I can quite confidently tell you the money didn’t get them anywhere," he said.

Other politicians said the company performed top-notch work for taxpayers.

"In my eyes, we’ve done nothing wrong and they’ve done nothing wrong to our township," said East Hanover Mayor Joseph Pannullo, a Democrat, who received $6,000 in secret contributions. "They were an excellent engineering company; they did a phenomenal job in our town."

Since the indictments of Birdsall and its executives, officials in many towns, cities and counties have scrambled to cut ties with the firm. And now that the company has pleaded guilty, campaign finance experts said anyone who received Birdsall’s money should cough it up.

"The money is an ill-gotten gain," said former state Sen. Bill Schluter, a Republican who advocates for campaign finance reform and was chairman of the State Ethics Commission. "Maybe they didn’t know at the time what Birdsall was doing, but they know now and should give it back."

In response to questions from The Star-Ledger, some officials pledged to donate Birdsall’s secret donations to charity.

Phil Alagia — the campaign manager for DiVincenzo, who records show received $5,900 worth of contributions — said all of Birdsall’s money will be donated to charities in light of the company’s recent guilty plea. Assemblyman Robert Clifton (R-Monmouth), a former freeholder in the county who records show received $7,200 in contributions, said in a statement he will do the same.

Other officials said the money — used to pay for everything from campaign mailers and lawn signs to meals and office space — had been spent and was long gone.

"My contributions were exhausted," said East Hanover Councilman Michael Martorelli, a Democrat, who records show received $6,900 in secret donations. "If an individual has the funds, I wouldn’t be opposed to donating them. If it would make everyone feel better, I would do it."

Birdsall’s political machine ground to a halt in May 2012, records show, after the company’s former marketing director, Philip Angarone Jr., was secretly recorded by his estranged wife explaining how he had received illegal reimbursements from the firm for campaign contributions.

The tape landed in the hands of detectives at the state Attorney General’s Office, leading to an investigation that resulted in the March indictment of Birdsall and seven former executives, who stand accused of making more than $686,000 in secret and illegal contributions.

The firm pleaded guilty this month to charges of money laundering and making false representations for government contracts, and agreed to pay a $1 million fine in addition to $2.6 million in civil penalties. The executives have pleaded not guilty.

Two other Birdsall employees, Angarone and Eileen Kuhfahl, have pleaded guilty in connection with the case. Another eight Birdsall employees have been implicated in court documents as having also been involved in making secret donations, but they have not been charged.

Under New Jersey law, campaigns do not have to report any information about people who contribute $300 or less, which allowed Birdsall to funnel its money to campaigns and political groups while keeping its influence hidden from the public.

To date, the Attorney General’s Office has declined to identify who received Birdsall’s money other than to say it went to Republicans and Democrats. The office declined comment.

The records, meticulously kept and numbering 137 pages, were provided to the newspaper and independently verified by multiple people familiar with the company’s operations. The information was then entered into a database, which is now available at The Star-Ledger’s online home, NJ.com.

COST OF DOING BUSINESS

At its height, Birdsall, founded in 1919 and based in Eatontown, was one of the largest and most influential engineering firms in the state.

The private company employed more than 325 people and raked in more than half of its revenue from public contracts. Birdsall made $5.6 million before taxes in 2012 on net revenue of $49.5 million, according to court documents included in the firm’s bankruptcy filing in March.

But with prominence came a price.

Since at least 2006, top Birdsall employees met weekly inside the company’s offices to draw up blueprints for where it should target its donations, according to sources familiar with the operations who requested anonymity because of the ongoing criminal investigation.

Most of the donations bought Birdsall a seat at political fundraisers so its executives could rub shoulders with politicians. The events ranged from cocktail parties, birthday bashes and golf tournaments to lobster fests, clambakes and beef and chicken dinners, records show.

But sources said the message behind the fun was clear: If you want to work, you better pay up.

Under a patchwork of state and local pay-to-play laws, companies such as Birdsall that are awarded large public contracts are, in many cases, prohibited from directly contributing more than $300 from their corporate accounts to officials responsible for doling out the work.

In towns, cities and counties where the restrictions did not apply, Birdsall wrote corporate checks and disclosed them to the state Election Law Enforcement Commission, as required. The company, for example, gave $859,300 in corporate donations from 2008 to early 2012, records show.

But in places where the restrictions did apply, or where Birdsall preferred to keep its contributions secret from one political party or another, the sources said the company funneled the money and evaded public scrutiny by having employees write personal checks.

In October 2009, records show, Birdsall gave Acropolis, the mayor of Brick, and three current councilmen — Joseph Sangiovanni, Dan Toth and Domenick Brando — each a corporate check for $300, then another $700 each in secret checks.

"Would it influence me?" Toth said. "No, I didn’t even know they gave me the money."

A year later, Birdsall did the same thing in Barnegat, giving Committeeman Al Bille a corporate check for $300, and on the same day giving another $4,800 to Bille through secret checks, according to the records. Bille received a total of $9,600 in secret checks, records show.

In November 2011, at a fundraiser hosted by Birdsall, the company wrote Monmouth County Freeholders Gary Rich Sr. and Lillian Burry corporate checks for $300 each, then gave Burry another $1,200 and Rich $900 in secret checks, records show.

When local laws changed, Birdsall changed with them.

From 2008 through 2010, the company made $215,500 in corporate donations and $8,385 in secret donations to county-level candidates and political groups in Bergen County, records show.

But in 2011, when county freeholders considered and eventually adopted a stricter pay-to-play law, Birdsall began giving all of its money in secret, doling out $11,375 in personal checks that year and $4,650 through early February 2012.

COVERING ALL THE BASES

Secret donations flowed every year like free wine from Birdsall.

They went directly to campaigns, such as the $10,000 each to former Barnegat Mayors Al Cirulli and Jeff Melchiondo, records show, and $8,100 went to the current mayor, Len Morano. Other mayors listed in the records included Chris Bollwage of Elizabeth ($6,750), David Most of Lacey ($6,150) and Mark Smith of Bayonne ($6,100).

"I don’t remember Birdsall giving me that kind of money," Morano said. "But it is what it is. It was all legal."

"Everything was above board," Most said. "If there was somebody that was more qualified than Birdsall, then we would have hired that engineering outfit."

Another $8,600 went to Lakewood Committeeman Raymond Coles, $7,700 to former Jackson Councilman Michael Kafton and $6,900 to East Hanover Councilman Frank DeMaio. The records also included state Sen. Robert Singer (R-Ocean), who received $3,300, and Booker and Sweeney, who received $1,000 each.

The N.J. engineering firm Birdsall Services Group of Eatontown pleaded guilty this month to engaging in a massive pay-to-play scheme. Cases are pending against seven former executives

"We had no idea anything was done improperly by the company," Singer said.

In some locations, Birdsall blanketed entire county boards with secret donations.

The five Ocean County freeholders received $26,800 from 2008 to early 2012, records show. Of that amount, $10,500 went to Joseph Vicari, $10,200 to a joint committee for John Bartlett Jr. and Gerry Little, and $6,100 to a joint committee for James Lacey and John Kelly. Another $6,300 went to Administrator and former county Clerk Carl Block and $3,600 to the current clerk, Scott Colabella, records show.

Block, Colabella and Gilmore each said none of the county’s elected officials get involved in political fundraising or insert themselves into the process for awarding contracts, which are competitively bid. Block said that practice gives them insulation should any questions arise.

"Just because, for this very reason, if there ever was an accusation that this was happening, they’re not part of either side," Block said. The freeholders do eventually sign off on contract awards, he said, but by that point proposals have gone through multiple layers of review.

In Monmouth County, Birdsall’s home, records show the five current freeholders received $18,200 from 2008 to early 2012, including $5,700 to Burry, $5,370 to John Curley, $3,750 to Thomas Arnone, $2,100 to Rich Sr., and $1,280 to Serena DiMaso. Another $600 went to Clerk Claire French, records show. The freeholders said in a joint statement they "fully support and take care to comply" with all election and campaign finance laws.

"We are aware that a professional service vendor to Monmouth County government has allegedly engaged in illegal efforts to circumvent these laws," the statement said. "If true, this conduct is unacceptable to all of us. Since 2006, contracts were awarded to this vendor and other contracts were awarded to other engineering companies by the county based upon a competitive bidding and evaluation process."

The freeholders added, "Prior to the time these allegations were made public, we had no knowledge that any campaign contributions made to us by any company or any group of employees may have violated any state laws or regulations."

Birdsall also made thousands of dollars in secret contributions indirectly to candidates and power brokers through municipal and county political parties and political action committees, a popular vehicle over the years for companies seeking to evade pay-to-play laws.

Two months before the 2008 election in Barnegat, the company dumped $13,200 total in secret donations into the coffers of the Barnegat Republican Club and the Barnegat GOP PAC, records show, and on the same day gave another $6,300 to the Barnegat GOP Campaign 2008.

That same year, Birdsall gave to Democrats in South Brunswick: $1,800 in secret donations went to South Brunswick Dems 2008, according to the records, and another $1,800 went to the Committee for Civic Responsibility, a Middlesex County Democratic PAC.

In 2009, records show, the company gave $2,000 to the Leaders Fund, a PAC tied to Norcross, during a fundraiser honoring the South Jersey boss.

"I was honored at an event, and somebody wrote a check among hundreds of thousands of dollars that were probably raised for that PAC, which I’m not affiliated with," Norcross said. "I’m not an officer, director, nor do I control that PAC."

In some cases, Birdsall’s support even went beyond politics.

In March 2011, records show $2,500 went to the legal defense fund for Angie Devanney, the wife of former Union County Manager George Devanney. The records do not indicate the purpose of the legal defense fund, and Angie Devanney denied receiving the company’s money.

Around the same time, the county spent several thousand dollars on legal representation for George Devanney, the nephew of state Sen. Raymond Lesniak (D-Union), after learning of a U.S. Justice Department investigation. The target of that investigation was never made public.

'A WINK AND A NOD'

Political donations have long been the entry fee for doing business in New Jersey.

"I don’t think it’s any secret that in one way or another, payments of money are made in order to curry favor with politicians here every day," said Stier, the court-appointed head of Birdsall. "What you’ve seen here may be just the tip of the iceberg. And I say that because historically in New Jersey, these kinds of cases have surfaced over and over again."

He said the state’s investigation was "incomplete" and must turn its focus on how the political system operates.

"It’s my hope and expectation that the Attorney General’s Office will do everything that they can to clean up the marketplace," Stier said, including the politicians "who are getting the economic benefits of it."

But campaign finance experts said wrongdoing on the part of politicians can be hard to prove because they rarely create a paper trail, and then plead ignorance.

"There is usually no smoking gun," Schluter said. "All you need is a wink and a nod. Anybody in politics in a certain community knows who needs the money and how it’s going to get there. It’s just unspoken."

But pay-to-play only works with two willing dance partners, said Holman, one of the original architects of New Jersey’s law, and Birdsall would not have invested so much money in politicians unless those politicians knew why it was being given.

"If it’s anonymous or they don’t know about it, it’s kind of hard to expect a return favor," Holman said.

Court documents show company officials believed the investments paid dividends.

In an affidavit filed in March, Kuhfahl, a former marketing manager for Birdsall who agreed to a plea bargain with the Attorney General’s Office, was quoted as saying the secret contributions "regularly won contracts" for the company.

"If there were three upcoming bridge projects in a particular county, one would be allotted to Birdsall following a contribution to a county candidate or committee," Kuhfahl told authorities. "Birdsall would be awarded the allotted project so long as their bid represented a ‘decent price,’ and not ‘double’ the amount of a competing bid, or something ‘unreasonable.’ "

The affidavit said Birdsall’s former marketing director, Angarone, who also agreed to a plea bargain, told detectives the secret checks were made out for $299 not only to avoid reporting requirements, but also as a "signal to recipients that the funds represented ‘unofficial’ Birdsall contributions" and were given to "curry favor" with officials and "gain a competitive advantage."

Both Kuhfahl and Angarone are awaiting sentencing. An attorney for Angarone declined comment, and an attorney for Kuhfahl did not return a message.

Regardless of what politicians knew of Birdsall’s scheme, one thing is certain: They can forget about getting any more money from the firm.

The head of the company that bought Birdsall’s assets — Partner Assessment, which operates Partner Engineering and Science of Torrance, Calif. — said earlier this month his firm will compete for public contracts on merit and make no political donations.

"If we can’t win the work based on merit alone, we don’t want that work," Partner President Joseph Derhake said.

But, acknowledging the culture of New Jersey, he added, "We’ll see how that goes."

COMPLETE LIST OF SECRET DONATIONS

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